MODULE 1: Learning Activity 3

1. Differentiate quantity demanded, demand, and demand curve.

o Quantity demanded-total amount of goods or services that consumers
demanded over a given interval of time which depends on the price in the
market.
o Demand-it refers to the quantity of goods or services that buyers are willing to
buy.
o Demand curve-graphical representation of the relationship between the price of
good or services and the quantity demanded for a given period of time.
2. Differentiate quantity supplied, supply, and supply curve.
o Quantity supplied-quantity of commodity the producers are willing to supply and
sell at a particular price at a particular period of time.
o Supply-total amount of goods or services in the market that is available to
consumers.
o Supply curve-graphic representation that shows direct relationship between
price and quantity supplied for a given period of time.
3. If the price is the determinant of quantity demanded and quantity supplied,
then why is conventional economics putting price in the y-axis of the graph
(while it should be on the x-axis).
o We have price on the vertical axis  because of Alfred Marshall. A benefit to putting
price on the y-axis is it allows for more intuitive shifts in the curves to occur.
Under the old setup, increases in demand or supply shift the curves "outward" to
the right, which seems to make intuitive sense. Changes in production capacity
shift the supply curve and changes in tastes shift the demand curve. These are
effectively quantity changes that subsequently affect prices. This makes quantity
the independent variable and price the dependent variable. From this
perspective, price should be on the vertical axis.